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Top 10 false assumptions in doing international business

We see it repeatedly, from the low-level trainee right up to the CEO. Americans often start with the wrong assumptions when entering a foreign market

The assumption set used when marketing, selling, hiring and buying from foreign countries is critical to our eventual success.

When devising an international strategy for a corporation, the presumptions are the first thing to address.

(10) There is an "international market."

Ghana, Greece or Malaysia? This first assumption divides the world into two pieces: us and them. And the danger is apparent: We think of the "rest of the world" as one entity. Intellectually, we know there are several entities, each with their own language, culture and business practices.

(9) "Business is business" (the world is getting smaller).

The shrinking of the planet forces us to make less, not more, suppositions about how our counterparts conduct business. Thirty-five years ago, a $50 million manufacturer didn't worry about Chinese offshoring, Indian software or Italian design. Today's CEOs must think globally, initially by recognizing the differences, not the similarities.

(8) Our technical skills will transfer abroad.

A CFO is a CFO. An XML programmer is the same anywhere in the world. This attitude costs money, reputation and time to market. The CFO who is an expert in financial modeling needs to interact with locals who may not respect his authority or knowledge, and may organize finances differently.

(7) A contract comes at the end of the process; a deal is a deal.

The "holy contract" (as Dutch often call U.S. contracts) comes at the end of U.S. negotiations. Contracts often serve as "outlines" in Southeast Asia, the Middle East, and Central and Eastern Europe. The rule to think about is "first a contract, then a negotiation."

(6) Doing international business is cheap (even free).

This assumption is scary. I often speak with CEOs who spend millions of dollars running firms and fighting for market share in their home markets. They then turn around and tell me that "we will take a few business trips, find a partner, and things will succeed abroad. The partner will get the operation profitable, thus there is no need to invest."

One such firm is approaching the largest global market for its service, but the CEO hasn't committed a single dollar. If it costs money to access domestic customers, or get a local factory productive, why would it be free to do the same in China, India or Canada?

(5) If they speak like us, they think like us.

When we deal with Canadians, British, Australians (and even Dutch, Germans and Scandinavians), we conduct business in our mother tongue. But we are also making a leap, assuming their values, goals, beliefs and perceptions match ours. We can speak the same language, but the similarity ends there. The British joke that the United States and Britain are two countries separated by a common language.

(4) Success overseas depends on how good our product or service is.

The better mousetrap isn't the answer. Sales overseas are dependent on having the best relationship. We need to work on our customer intimacy, not our product differentiation.

The United States no longer is the top exporter of technology. We can blame China, or we can wonder why we use CRM software instead of visits to keep track of clients.

(3) Imported goods are often better.

Evidence of this is that Americans drink French water, drive European cars, wear Italian suits and buy Swiss watches. However, Japanese consumers may be concerned with how Japanese a product is. European firms may wonder about the factories that foreigners will cause to shut down. China makes its own computers and DVD players to stimulate the Chinese industry.

(2) Money is the ultimate reward.

Many foreign business people are motivated by status, power and social responsibility. In Poland, it's more prestigious to be a large employer than to be wealthy. The factory boss won't fire his neighbors to make a few extra dollars.

(1) The No. 1 assumption: "It worked in our market. It should work in theirs."

It would be easy to write an entire column on this assumption.

We sell products in colors that are taboo.

We don't recognize that there may be seven- or even 15-step distribution chains in some markets.

We have firms building to the wrong specifications. For example, we try to sell big refrigerators in countries that use small ones, or attempt to sell autos with steering wheels on the incorrect side. We market milkshakes with no milk in them, labor-saving devices where countries want to keep employment high and sports drinks in countries where there isn't enough food to eat.

So, does your business model make sense for doing business overseas?

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